FTC bans junk fees on live entertainment and hotels

Photo Credit: Ticketmaster

The Federal Trade Commission (FTC) has announced its final Junk Fees Rule that aims to cut down on fees tacked on at checkout for live events and hotels & AirBNBs. The FTC says ‘junk fees’ hide the real price, which harms consumers and undercuts honest businesses.

“People deserve to know up-front what they’re being asked to pay—without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid,” says FTC Chair Lina Khan. “The FTC’s rule will put an end to junk fees around live event tickets, hotels, and vacation rentals. This will save Americans billions of dollars and millions of hours in wasted time.”

“I urge enforcers to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy.”

The FTC says it studied live event ticketing and short-term lodging industries’ check-out process to help develop this rule. It’s aimed at preventing surprise costs at check-out tacked on as a ‘resort fee,’ ‘convenience fee,’ or ‘service fees’ that inflate the final advertised cost by hundreds of dollars.

The airline industry has lobbied against the tackling of junk fees, with Alaska Airlines, American Airlines, Delta Air Lines, JetBlue, and Hawaiian Airlines joining together under the lobbying group Airlines for America to oppose the new rule. The airlines sued the Department of Transportation stating the Biden administration’s “attempt to regulate private business operations in a thriving marketplace is beyond its authority.” Southwest Airlines did not join the lobbying efforts stating it agrees with the Biden administration.

The FTC estimates that its new ban on junk fees will save consumers up to 53 million hours per year of wasted time searching for total prices for live-event tickets and short-term lodging. It’s worth nothing that in this final ruling, airlines are not mentioned anywhere.

The new Junk Fees Rule requires businesses to clearly and conspicuously disclose the true total price inclusive of all mandatory fees when they offer, display, or advertise any price of live-event tickets or short-term lodging. Businesses cannot misrepresent any fee or charge in any offer, display, or ad for those services. The most prominent price in the ad must be the total all-in price.

The FTC vote approving the final rule was 4-1, with Commissioner Andrew Ferguson dissenting. The final rule is set to become effective 120 days after its publication in the Federal Register. It’s unclear if the incoming Trump administration FTC will keep that rule in place. Khan’s term as FTC Commissioner expired in September, though she has stayed on. If Khan chooses to step down in January, these initiatives may be on the chopping block for the new FTC Commissioner.